CBA CBA Business Law & Regulatory Compliance 2 — Questions and Answers
Question 1: A non-compete agreement is most likely to be enforceable when it is:
- Unlimited in duration and geographic scope
- Reasonable in scope, duration, and geographic area (Correct answer)
- Applied to all employees regardless of role
- Retroactively added after employment begins
Correct answer: Reasonable in scope, duration, and geographic area
Courts uphold non-compete agreements that protect a legitimate business interest and are reasonable in time, geography, and scope of restricted activities.
Question 2: Under the Fair Labor Standards Act (FLSA), which category of employees is exempt from overtime pay requirements?
- All salaried employees regardless of duties
- Employees earning over $684/week who perform executive, administrative, or professional duties (Correct answer)
- Part-time employees working under 30 hours per week
- Employees in manufacturing and production roles
Correct answer: Employees earning over $684/week who perform executive, administrative, or professional duties
The FLSA white-collar exemption applies to employees paid at least $684/week on a salary basis who perform bona fide executive, administrative, or professional duties.
Question 3: A business advisor notices a client's contract contains an unconscionable clause heavily favoring the other party. In contract law, unconscionability typically refers to a term that is:
- Illegal under federal statute
- Shockingly unfair or oppressive, often involving unequal bargaining power (Correct answer)
- Ambiguous and subject to multiple interpretations
- Missing a required element such as consideration
Correct answer: Shockingly unfair or oppressive, often involving unequal bargaining power
Unconscionability addresses contracts or clauses that are so one-sided or oppressive — particularly where there was unequal bargaining power — that enforcement would be unjust.
Question 4: Which of the following best describes a 'piercing the corporate veil' scenario?
- A corporation merges with another entity
- Courts hold shareholders personally liable by disregarding the corporate legal separation (Correct answer)
- A company files for Chapter 7 bankruptcy protection
- An LLC converts to a C corporation for tax purposes
Correct answer: Courts hold shareholders personally liable by disregarding the corporate legal separation
Courts pierce the corporate veil when shareholders use the corporate form to perpetrate fraud or fail to maintain proper separation, making them personally liable for corporate debts.
Question 5: The Equal Employment Opportunity Commission (EEOC) enforces laws prohibiting employment discrimination based on all of the following EXCEPT:
- Race and color
- Religion and sex
- Marital status (Correct answer)
- National origin and disability
Correct answer: Marital status
While federal EEOC laws cover race, color, religion, sex, national origin, age, disability, and genetic information, marital status is not a federally protected class under EEOC jurisdiction.
Question 6: Which antitrust law prohibits monopolization and attempts to monopolize trade or commerce in the United States?
- Clayton Antitrust Act
- Sherman Antitrust Act (Correct answer)
- Robinson-Patman Act
- Federal Trade Commission Act
Correct answer: Sherman Antitrust Act
Section 2 of the Sherman Antitrust Act prohibits monopolization, attempted monopolization, and conspiracies to monopolize any part of trade or commerce.
CBA CBA Business Law & Regulatory Compliance 2
A non-compete agreement is most likely to be enforceable when it is: